Bangladesh's ready-made garment (RMG) sector is currently at a pivotal moment, grappling with challenges brought about by political instability, market competition, and external economic pressures. The RMG industry, which plays a significant role in the country's economy, is now undergoing shifts due to the fallout from recent political events and supply chain disruptions.
Ranked second globally, the RMG sector of Bangladesh exported garments worth approximately $38 billion, following China, which leads with $165 billion. This impressive figure is noted in the ‘World Trade Statistical Review 2023’ report from the World Trade Organization (WTO). The economic contributions of this sector have been formidable, propelling Bangladesh’s rise as the center of the global apparel market.
The impact of the garment industry is more than just financial. It serves as the backbone of the Bangladeshi economy, providing jobs to over four million people, with women making up 60% of the workforce. The industry has not only offered economic opportunities but has been instrumental in poverty alleviation, allowing many to transition from low-income backgrounds to more stable livelihoods.
“The garment sector is the bedrock of our economic growth,” says policy analyst ASM Akram. The sector's importance cannot be overstated, accounting for around 80% of Bangladesh’s export earnings and roughly 18% of its GDP, with projections of sustained growth. During the fiscal year 2021-22, Bangladesh exported garments valued at $45 billion, solidifying its position as the second-largest garment exporter worldwide, as indicated by data from the Export Promotion Bureau.
Yet, the path forward is not smooth. The resignation of former Prime Minister Sheikh Hasina marked the beginning of turbulent times for the country. The political scene has become chaotic, characterized by protests and civil unrest. The student movement, demanding urgent political reform, has been at the forefront of these protests, calling for changes to the leadership structure, including advocating for economist Muhammad Yunus to head the interim government. This has instigated heightened tensions across various economic sectors, particularly the garment industry.
Many garment factories found themselves caught not only in the crossfire of political strife but also suffering from operational setbacks. Since mid-2024, gas shortages have plagued the industry, leading to production cuts and halting operations for many factories. Reports indicate some factories are functioning at less than 30% capacity, severely impacting output and delaying shipments.
The turmoil hasn’t gone unnoticed by international buyers, who are now wary and considering alternatives under what they refer to as the 'Bangladesh-plus-one' strategy, which has significant ramifications for the local RMG sector. Competing countries like India and Vietnam are eyeing this shift as they seek to capture part of Bangladesh's market share due to its currently unstable environment.
Recent political turmoil and rigorous protests have also contributed to supply chain disruptions, not just within Bangladesh but globally. The August unrest resulted in internet blackouts, hampering communication channels with foreign buyers. This delayed garment exports and resulted in hefty demurrage charges for many exporters, prompting fears of long-term relationships suffering as trust erodes.
“We’re hitting rock bottom here,” lamented one factory manager. The operational challenges are so intense they are creating knock-on effects, reverberations felt throughout the exporters’ economy.
Local and international stakeholders have expressed serious concerns. It’s evident the garment sector, the pride of Bangladesh’s economic model, is on shaky ground. There’s hope pinned on the interim government to reinstate stability, boost investor confidence, and mend relationships with international buyers. Such measures are seen as imperative to ensuring the industry can reclaim its footing and bounce back from recent blows.
“Gas supply must be prioritized,” officials stress, emphasizing how integral energy supply is for the sector's revival. The need for political stability is equally urgent, as intermittent violence has created environments hostile not only to business operations but also to attracting new investment.
The current administration is urged to enact immediate measures to stabilize the garment sector. These include addressing the gas crisis urgently, punishing instigators of unrest, and fostering supportive relationships with both domestic and international buyers. Such strategies will enable the industry to not just weather this storm but emerge resilient.
For Bangladesh, the garment sector is not merely about producing clothes for the global market; it is about livelihood security for millions of families and continued economic development. Ensuring the sector's survival and growth hinges on swift and effective governmental action against the backdrop of political and economic chaos. The future remains uncertain, but the stakes could not be higher, and the collective hopes of many rest on the sector's revival.
